China’s Iron & Steel Association has advised Chinese steel mills that they should refuse to sign iron ore purchase contracts that are not based on a basket of indices. CISA Secretary General Mr Liu Zhenjiang said at CISA’s annual raw materials conference in Dalian “The use of mixed indices will bring fairness to the market. China spends USD 60 billion on buying iron ore, most of which is priced off published indices. Since there are so many such price references now available, it would make sense to use a mixed approach.”
Cisa has been pushing since last year for mining firms to adopt a mixed basket of indices to price iron ore, rather than sell on a dominant reference index. The past year has seen a number of firms adopt a range of different indices to price their products. But the association has recommended that a basket should be implemented as the pricing mechanism by major global mining companies starting this year.
Source : STRATEGIC RESEARCH INSTITUTE, STEELGURU
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